Nip Identity Theft In The Bud (Forbes)   Leave a comment

The recent surge of hacking incidents highlights how vulnerable we all are to identity theft. One way to nip identity theft in the bud is by constantly monitoring your credit report which will let you see if there has been unauthorized activity using your personal information. It is pretty easy to get a free copy of your credit report either online, over the phone or through the mail (usually takes about 15 days to receive).  Online reports are not only free, but they are accessible real time.

Free credit reports can be obtained from three major resources: TransUnion, Experian, and Equifax. These agencies provide the credit reports that monitor your financial history and issue credit scores. These services are helpful because if any bank rejects you for a credit related issue, you have the option and the right to request a free copy of the credit report. This allows you to identify and correct any errors, mistakes, or even fraud in your credit history. Free credit reports are helpful tools that can lead you one step closer to getting the loan or the mortgage you want.

Are you eligible?

Free credit reports are available to anyone who has been turned down for credit, anyone who is unemployed and plans to seek employment within 60 days, and anyone who receives public welfare. Additionally, all consumers qualify for a free annual credit report once a year from all three of the consumer reporting companies – Equifax, Experian, and TransUnion.

Under the Fair Credit Reporting Act, nationwide credit bureaus are required to provide consumers with free credit reports upon their request once every 12 months. It is best to stagger your requests to each of the three agencies during the year so you are always receiving current reports. Checking your credit report regularly will help you keep track of your financial activities and can reveal if you are a victim of identity theft.

Why do credit scores matter?

Another benefit of receiving your free credit report is learning what your credit score is. Your credit score is a three digit summary and analysis of your financial behavior history. The FICO Score, the most-widely used score, was developed by Fair Issac Corporation – an analytics company in 1958. From this number, future lenders will be able to determine whether you are reliable and capable enough to take on more debt. Credit scores, in short, give banks and other financial institutions an idea of whether you are “credit worthy”. A higher credit score will give financial institutions more confidence in you, and can help you obtain loans more easily when it comes to financing for a home, car, or new credit card.

Difference between credit report and credit score?

A credit score is a quick way to evaluate a credit holder’s credit-worthiness. Credit reports, on the other hand, provide detailed history of the loans you have obtained and the credit cards that you have received along with outstanding balances. Every time you miss a payment, you obtain a loan or take out a mortgage; your activities are recorded in a credit report. When financial institutions want to find out more about your financial history, they go to your credit report to see how you have paid your bills and used your credit, and how much credit you have left.  In short, a credit score makes the first impression to credit lenders as it reflects your past behavior, and for the full story, credit lenders go ahead to examine the full details on your credit report.

How can you improve your credit report?

No one is perfect. Even the most responsible people can miss a payment or go over their credit limit once in a while. When those mistakes and miscalculations happen, it reflects on your credit score and credit report. You don’t need to strive for having a perfect credit score, but instead, it helps to know how to improve your credit score to a level where lenders will be interested in making the loans you want. For everyone who has a desire to improve their credit report, the first thing is to set a realistic goal. If you have a current credit score of 480, it will take more than paying your bills on time for two months to have your score bumped up to a 750.

With a realistic goal in mind, the next thing is to have a strategic plan. Start with small things such as budget your grocery bills, marking your calendars for payment days, and regularly monitoring your account balance. Credit management skills also need to be developed by setting regular payment routines and monitoring your spending so as not to get further into debt. Try to pay more than the minimum payment each month on your credit card bills – that’s a good way to build up a good credit score.

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Posted June 26, 2011 by ilanamelissagreene in Uncategorized

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